Damage Resulting From Natural Decay Under Insurance, Carriage And Sale Of Goods Contracts

AuthorDavid M. Sassoon
Publication Date01 Mar 1965
DOIhttp://doi.org/10.1111/j.1468-2230.1965.tb01054.x
DAMAGE RESULTING
FROM
NATURAL DECAY
UNDER INSURANCE, CARRIAGE
AND
SALE
OF
GOODS CONTRACTS
A.
INSURANCE
A
UNIVERSALLY
recognised-fundamental and basic-principle of
insurance law is the rule exempting the insurer from liability for
damage arising from the natural behaviour, generally described as
the inherent vice
(or
defect),
or
the ordinary wear and tear, of the
subject-matter insured. Where,
e.g.,
goods deteriorate as a result
of a latent defect, and not because of some extraordinary or fortuitous
circumstance
or
casualty, the insurer, unless he specifically assumes
this responsibility,' is not liable to indemnify the assured for the
loss suffered.
This is the case because under these circumstances, there is in
effect no uncertainty with respect to the ensuing loss. Although this
might not necessarily be known to the parties themselves at the
time, it is in the nature of a foregone conclusion, and, consequently,
it cannot be attributed to an accident
or
described as a
"
risk
"
for which the insurer has undertaken to provide cover.
In
other
words, the insurer, subject to the terms of the policy,
is
only
liable to provide indemnity
"
against accidents which may happen,
not against events which must happen."
As
explained by Lord
Birkenhead in the leading case of
British
4
Marine
Znsurance
Co.
v.
Gaunt
3:
In construing these policies
it
is important to bear in mind
that they cover 'all risk.' These words cannot, of course,
be held to cover all damage however caused, for such damage
as is inevitable from ordinary wear and tear and inevitable
depreciation is not within the policies. There is little authority
on the point, but the decision
of
Walton
J.
in
Schloss
Brothers
v.
Stevens,'
on a policy in similar terms, states the law accu-
rately enough. He said that the words
'
all risks by land
or
water
'
as used in the policy then in question
'
were intended
to cover all losses by any accidental cause
of
any kind occurring
during the transit.
.
.
.
There must be a casualty.' Damage, in
other words, if
it
is to be covered by policies such as these,
must be due to some fortuitous circumstance
or
1
See
p.
183
below.
2
Per
Lord
Herschel1
in
The
Xantho
(1887) 12
App.Cas.
503
at
p.
609.
3
[1921]
2 A.C. 41 at pp.
46,
47.
4
[1906]
2
K.B.
665
at
p. 673.
5
Cj.
London
and
Provincial
Leather
Proces8ea
Ltd.
v.
Hudson
[1939] 2
K.B.
180
724
("
All
Risks
"
policy
protects against conversion).

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